We all know that LLP is a partnership where some or all the partners have limited liability. But, what if one of the partners wants to resign from the company? Is the same procedure for resignation applicable to a private limited company is applicable to an LLP too? Let's learn.
As per Section 24(1) of the Limited Liability Partnership Act of 2008, "a person may cease to be a partner of a Limited Liability Partnership in accordance with an agreement with the other partners or, in the absence of an agreement with the other partners as to the cessation of being a partner, by giving a notice in writing of not less than 30 days to the other partners of his intention to resign as a partner"
Basically, a partner in an LLP may cease to be a partner of an LLP in accordance with the LLP agreement between the partners. So, if a partner wants to resign from a Limited Liability Partnership, he/she can do so at any time. But, the partner must follow the procedure of resignation.
If a particular procedure for the resignation has been mentioned in the agreement, the partners can follow the same. But, in case if no procedure has been specified in the agreement, partners must initially send a notice to other partners of an LLP expressing their intention to resign at least before 30 days of the resignation. A partner will not be automatically discharged from his/her liabilities on resignation and will be liable for the actions and obligations. Simultaneously, at the time of resignation, the partner will get his/her shares of profit. Hence, at the time of resignation, a partner will be entitled to an amount equal to the capital contribution of the former partner actually made to the Limited Liability Partnership and his/her right to share in the accumulated profit of the LLP.
Documents required:
Supplementary Limited Liability Partnership Agreement
Resolution for taking note of the resignation of a partner
Resignation letter of resigning partner
Revised and reinstated LLP Agreement
Proof of acceptance of resignation letter by the firm
The following is the procedure commonly followed on resignation:
Sending a letter of resignation to the remaining partners
Holding a meeting and discussing the liabilities, debts, etc of the resigning partner
Drafting and execution of supplementary LLP Agreement
Filing LLP Form 3 and 4* within 30 days from the date of the event.
*LLP Form 3 is filed when any changes with regard to the information on the LLP agreement are made and Form 4 is required to be filed for every appointment, cessation, and change in name/address/designation of a designated partner or partner.
So, primarily, a resignation letter will be prepared and summited to the partners of the LLP. Then, all the partners accept the resignation by passing a resolution in the meeting. On the filing of LLP Form 3 and 4, the Registrar of Company shall note the same and approve the forms, if everything is fine. Finally, changes will be made in the LLP Agreement accordingly.